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Government Affairs Albany Update

April 2, 2004

Construction 240/241 Lobby Day a Success

On March 30th over 450 contractors, industry and construction company representatives descended on Albany to lobby the Legislature for reform of sections 240/241 of the Labor Law. The day was sponsored by the NYS Homebuilders and co-sponsored by a number of construction groups including The Business Council's construction affiliate, the New York State Construction Industry Council (NYSCIC). NYSCIC members participated in the lobby efforts by visiting Legislators and providing them with first hand evidence as to unfairness of 240/241 and its devastating impact on the construction industry. NYSCIC continues to advocate for the enactment of S.1710 (Volker) / A.7213 (Morelle) that would allow the introduction of a negligence standard rather than an absolute standard under the law.

240/241, commonly called the "scaffolding act", is responsible for the huge increases in insurance premiums and the dwindling market for affordable general liability insurance for the construction industry. Under this law, owners have no defense under lawsuits brought against them under 240/241 and are forced to settle and/or pay huge settlements/verdicts. The construction industry is united around the reform proposal S.1710 (Volker) / A.7213 (Morelle). This bill would reform the law and enhance the affordability and availability of liability insurance.

Silver Proposes New "CAPCO"

Assembly Speaker Sheldon Silver announced legislation this week (A.10484) that creates a fourth "capital corporation", which are venture capital funds supported by investments from insurance companies, who in turn receive tax credits for such investments. This "program four" CAPCO authorizes up to $50 million in such investments.

This legislation also requires:

Assembly Economic Development Initiative

The Assembly introduced a series of bills this week that would implement its "NY@Work" plan, announced several weeks earlier. These bills include:

A.10474 (DelMonte) - creates a 12 person economic policy coordination board, with members appointed by the Governor, with some members nominated by the Senate and Assembly. Look at competitiveness issues, evaluate effectiveness of existing development programs, and develop strategies and implementation plans.

A.10475 (John) - creates the "New York @ work" jobs creation program and fund. No additional details, or bill text, available at this time.

A.10476 (Aubertine) - creates the Economic Development Control Board, a three person board designated by the Governor, Senate and Assembly, to oversee, review and direct changes deemed necessary in the programs, activities and investments of the New York state urban development corporation and its subsidiaries.

A.10477 (Morelle) - the "Manufacturing Technology Act", directs the Department of Labor to issue requests for proposals for manufacturing technology program training grants for employers, consortia of employers, labor organizations or industry associations, with training to be provided through community colleges. Recipients would have to provide a fifty percent funding match for any such grants. The legislation includes no appropriations for this program.

A.10478 (Magnarelli) - the "Research and Development Accountability Act of 2004" creates an "innovation board" which would provide the legislature with information on the state's current research and development investments.

A.10479 (Espaillat) - creates the "bioscience facilities development program", which would provide grants to local economic development corporations, which in turn would create revolving loan funds to provide loans to bioscience facilities. Eligible regions must contain research institutions that have received at least five hundred million dollars in research grants from the National Institutes of Health during the year preceding application for such grant.

A.10480 (Towns) - creates a new program to support export trade development by independent small and mid-sized businesses (500 employees or less.) Grants of up to $100,000 could be used for export market analysis; export trade promotion; export trade finance technical assistance; development of strategic alliances among industry groups for the purposes of exporting; and other purposes.

A.10481 (Towns) - creates the "niche market assistance" program, which would provide grants of up to $200,000 to assist small and medium-sized manufacturers (less than 250 employees) to identify and dvelop niche markets for their products.

A.10482 (Magnarelli) - establish a manufacturing competitiveness program. Grants of up to $500,000 for applied research and development projects done jointly by a research institution and a manufacturer, or on behalf of (and partially funded by) a manufacturer, which is directed toward develop or design new, or to improve existing, industrial materials, devices, systems, processes, products, or prototypes, or to improve the productivity and competitiveness of the manufacturer.

A.10483 (Espaillat) - creates the "metro medical matrix program", a bioscience facilities development revolving loan fund that would support academic and commercial bioscience activity within New York City.

Other "NY@Work" components not addressed in these series of bills include: an extension of the state's Power for Jobs program; Empire Zone program reforms; and creation of a capital fund to foster investments in business incubators for start-ups and "accelerator" facilities for later-stage companies.

Single Sales Factor Allocation Part of Budget Discussion

The allocation of an Article 9-A corporation's total income subject to New York's Corporation Franchise Tax is under discussion in the 2005 Fiscal Year budget negotiations. The current bill language can be found in PART I of S.6060-A / A.9560-A (pages 23-26).

As proposed by the Governor, the shift in allocation formula from 50 percent weighting of the receipts factor (payroll and property equally sharing the other fifty percent) to 100 percent weighting of the receipts factor is limited to manufacturers.

Manufacturing activities are defined as the following Investment Tax Credit-eligible activities [Tax Law, § 210, subd. 12, ¶ b, sub-¶ i, clauses A and C]: "the production of goods by manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture, or commercial fishing" and "research and development". A manufacturer is defined as an Article 9-A "taxpayer which during the taxable year is principally engaged in (manufacturing) activities". "Principally engaged" is defined as "during the taxable year, more than fifty percent of the taxpayer's ... gross receipts are derived from such (manufacturing) activities. For Article 9-A taxpayers filing a combined report, the combined group's gross receipts (after the elimination of intercorporate receipts) are looked at.

The switch to 100 percent weighting would begin with the 2005 calendar year and be phased-in over a period yet-to-be-determined.